KUALA LUMPUR (April 24): Serba Dinamik Holdings Bhd's private placement order book has been oversubscribed by 1.5 times, having attracted both local and foreign institutional investors, the group said in a bourse filing today.

The company will be issuing 306.51 million new shares for the exercise, representing 10% of the issued and paid-up share capital of Serba Dinamik.

"The gross proceeds to be raised from the private placement are about RM456.7 million," it said, adding that the issue price was fixed at RM1.49 apiece.

The issue price represents a discount of about 10% to the five-day volume weighted average market price of Serba Dinamik shares of RM1.65 a unit as at April 23.

Affin Hwang IB is the appointed adviser for the proposed private placement. The firm, along with CIMB Investment Bank Bhd, Credit Suisse Securities (Malaysia) Sdn Bhd and Credit Suisse Securities (Singapore) Ltd were appointed as the joint placement agents for the exercise.

Serba Dinamik said it will utilise the proceeds for working capital and partial repayment of bank borrowings.

Kenanga Research and PublicInvest Research have given their votes of confidence for the group's fundraising exercise, citing interest saving, net-gearing reduction and increased capacity for expansion.

This will result in an interest saving of RM15 million or 2%-3% of earnings per year until 2021 and reduce net gearing by one basis point to 0.7 times, said Kenanga.

"Overall, the funds raised will increase financial flexibility for the company to continue delivering its growth targets," it added.

PublicInvest adjusted its financial years 2020-2022 earnings estimates slightly higher by an average 1.7% but earnings per share will be diluted by 6.9%.

"The exercise will also reduce gross and net gearing to 1.1 times and 0.6 times respectively," it said.

Both research houses maintained their “outperform” ratings on Serba Dinamik, with lowered target prices of RM2.80 and RM2.49 respectively.

Kenanga said it continued to like Serba Dinamik as the group has one of the best earnings growth delivery track record among its peers.

Additionally, it said the group should be one of the least-impacted players by the current crude oil downturn, as only about 40% of its order book is exposed to the O&G sector.

"An established international energy services provider player in its key markets, namely Middle East and Malaysia, [and] categorised under essentials services, the company had recently stated in the press that it is 'business as usual' and it has not seen its operations being significantly affected by the current situation.

"Further contract wins and continued earnings delivery would act as catalysts moving forward," said Kenanga.

According to PublicInvest, Serba Dinamik has a defensive business profile especially during the industry cycle downturn, with minimal risk exposures to oil price fluctuations.

The research firm's “outperform” rating is also premised on Serba Dinamik's strong earnings growth track record with a compound annual growth rate of about 50% since 2014.

"The stability in the group's future earnings is underpinned by its long-term recurring earnings," it added.

At 11.44am, Serba Dinamik shares fell 3.09% or 5 sen to RM1.57, for a market capitalisation of RM4.84 billion.